Cofounder and Chairman Jeffrey Citron has been interim CEO of Vonage since Michael Snyder resigned from that post and the company's board in April last year. Vonage has settled four major intellectual-property lawsuits in the past several months but is still struggling as larger players, including cable operators, expand in the VoIP (voice over Internet protocol) business.
Lefar may be just what Vonage needs. At Cingular (now AT&T Mobility), he was chief marketing officer for more than four years. During his tenure, the mobile joint venture's customer base more than tripled, and subscriber churn, or departures of existing customers, fell by half, according to Vonage.
Vonage, which went public in 2006, has a history of spending large sums on marketing to attract customers but not producing profits. That practice seems to be declining, as marketing expenses in the first quarter of this year, its most recent reported period, fell to US$61 million, or 27 percent of revenue. A year earlier, they had been $91 million, or 46 percent of revenue.
Meanwhile, revenue rose in the first quarter to $225 million, from $196 million in the first quarter of 2007. Vonage saw a net gain of about 30,000 subscribers in the quarter, to a total of 2.6 million. But the company still lost $9 million.
Last week, Vonage announced it had entered into a commitment letter to raise $215 million in private debt refinancing. It plans to use that money, plus some cash on hand, to repay debts that could come due on Dec. 16.
Lefar was appointed by Vonage's board of directors. Citron, who cofounded Vonage early in this decade, is staying on as the nonexecutive chairman and as a consultant on long-term strategy.
Lefar's appointment, announced after stock markets closed on Tuesday, seemed to help Vonage's ailing shares. The New York Stock Exchange stock (VG) was up $0.09 to $1.50 in after-hours trading late in the day.